Brexit fears weigh on TSX, June 13-17

Worries that Britain might vote to leave the European Union in a referendum on June 23 sent Canada’s main stock index down 0.97% to 13,901.77. A vote to leave the EU could slow global growth and weaken commodity prices, strategists warn, and many investors sought a safe haven in gold, which briefly exceeded US$1,300 per oz. (the first time in 15 months), before finishing at US$1,298.65 per oz., in a 1.9% increase. The S&P/TSX Global Gold Index rose 0.2% to 232.17. The S&P/TSX Global Mining Index advanced 2.3% to 58.20, and West Texas Intermediate crude closed at US$48.03.

Kinross Gold’s shares were the third most traded and fell 18¢ to $6.42. On June 13, the company announced the end of a strike by unionized employees at its Tasiast mine in Mauritania that had begun on May 24. Kinross reported that striking employees returned to work on June 11, with negotiations on a collective labour agreement and other items  expected within 10 days. (Under Mauritanian labour laws, employees retain the right to strike during negotiations.) The gold miner also noted that the strike was not expected to impact its annual regional guidance and did not affect development of the Tasiast phase-one expansion. The positive news, however, was followed by an announcement on June 20 that mining and processing operations at Tasiast had been suspended after allegations by the country’s labour ministry that certain expatriate employees at the mine held invalid work permits. The company said it “has taken all steps necessary to ensure that its work permits are in good standing and valid under Mauritanian law and to comply with the requisite formalities, including the filing of all requests and applications in accordance with the stipulated time frames.” It also noted that “a number of other institutions and companies in Mauritania are presently experiencing similar work-permit issues,” and reiterated its goal of increasing the number of local workers. (About 88% of the employees at Tasiast are Mauritanian nationals.)

Shares of Richmont Mines rose 66¢ to $11.69. The company reported on June 13 that it would be added to the S&P/TSX Global Mining Index and the S&P/TSX Global Gold Index on June 17. Richmont’s president and CEO Renaud Adams said inclusion in the indexes marked a milestone for the company and signified the progress it had made at “unlocking the potential” of its Island Gold mine. The move would also “improve trading liquidity and expose Richmont to a broader range of investors,” he said.

Endeavour Mining announced a $125 million private placement, sending its stock down $1.18 to $20.49 per share. A syndicate of underwriters led by BMO Capital Markets has agreed to buy, on a bought-deal basis, 6.25 million common shares at $20 per share. The underwriters can buy another 15% to cover any over-allotments. La Mancha Holding SARL will buy a minimum $15 million of Endeavour’s common shares on the same terms.